Worcester proposes $100m-plus in subsidies to steal PawSox from Rhode Island, now what?

Earlier this summer, the state of Rhode Island rejected a request by the owners of the Pawtucket Red Sox to fund a new stadium in Pawtucket. On Friday, the team owners announced their decision: They will be moving the franchise to Worcester, which will build a new stadium with public funds that the team will be repaying with rent and other team-related revenues, in a major win for the Massachusetts city.

All of that previous paragraph was reported in various media over the weekend. Virtually none of it is 100% true.

Let’s start where we left off: With the June legislative vote of the Rhode Island legislature, which actually approved $38 million in state and city subsidies toward a new Pawtucket stadium. What it didn’t do was promise that the state would cover any shortfalls in tax revenues set to pay off the stadium bonds, which could have raised interest rates to the point that the PawSox owners got snippy about it.

At the time — really, at just about any time in the last three years — Worcester was out there as a potential relocation threat, but nothing more specific than that, as nobody had publicly talked about how to pay for building a stadium there. That’s what changed on Friday, as the PawSox owners and the city of Worcester signed a “letter of intent” to build a $90 million, 10,000-seat stadium as part of a $200 million mixed-use development with hotels, apartments, and retail.

As for how it would all be paid for, here’s what the news media — at least those not too busy declaring the deal an “economic grand slam” for Worcester — is reporting it:

  • The city would borrow $100.8 million, while the team owners would kick in $6 million in cash. Of the city’s portion, rent payment from the team will pay for $30.2 million over 30 years — it’s not clear from the reporting if that’s $30.2 million in total rent payments, or enough rent payments to pay off $30.2 million in borrowing, which would be a whole lot more. (Just like $30.2 million in mortgage payments wouldn’t be enough to pay of a $30.2 million house, unless you got a no-interest loan.)
  • Assuming it’s the latter, that still leaves $70.6 million to be repaid by new tax revenues from the development — in other words, our old friend tax increment financing. But this is a TIF with a twist: Instead of just kicking back tax revenue from the stadium itself, the project would come packaged with that pile of hotels and housing and retail space — all of which would pay property (and other? reporting is unclear) taxes not to the city treasury to pay for services for all this new development, but toward the stadium’s construction debt.
  • The state would also kick in $35 million for a parking garage and “unspecified infrastructure improvements,” according to the Worcester Business Journal.

That brings the total public subsidy to at least $105.6 million, and possibly closer to $120 million if those rent payments are actual dollar amounts on the team owners’ checks. Either way, I’m pretty sure that this would be easily the largest public subsidy for any minor-league baseball team ever, and would blow away Rhode Island’s offer, even if that state hadn’t capped its debt responsibilities in the final bill.

So Worcester has just bought itself a really expensive Triple-A team, right? Not quite yet: The city council still needs to sign off on the whole mess, and while Massachusetts Gov. Charlie Baker is in favor of the state garage money, it may yet require state legislative approval as well. So notwithstanding all the talk about stadium construction starting next July, there may be some bothersome hearings and votes and such yet to go.

Officials in Rhode Island, and Pawtucket, meanwhile, are understandably steamed that after approving what they thought was a pretty good offer in June, the next thing they heard from PawSox officials was a letter on Friday saying, “Sorry, we found someone with more money.” PawSox CEO Larry Lucchino, meanwhile, put the blame squarely on Rhode Island for not scurrying to cough up more money more promptly, as it is the state’s job to do:

“As I said in our meeting on Monday, Aug. 6, ‘Where have you been?’ That’s not directed at your personally, but at all of those involved in the process.”

“The state’s delays cost Pawtucket dearly,” the baseball executive said.

In the end — if this is the end, which it probably isn’t yet — it’s an indication of how negotiating with minor-league team owners is exponentially harder than doing so with major-league ones, because there’s a near-infinite number of equally middling-sized cities to move to. Pawtucket’s best hope was that no cities within easy reach of Boston (where the Red Sox want their top minor-league teams close by) would take the bait and deliver a suitcase full of cash to Lucchino’s door; instead, Worcester came up with the fattest suitcase in history. Score one against Roger Noll’s theory that the tide is turning.


21 comments on “Worcester proposes $100m-plus in subsidies to steal PawSox from Rhode Island, now what?

  1. A comparable deal was the deal that brought the Phillies AAA team to Allentown–for a stadium that cost (in 2008) about $50 million–at the time the most expensive AAA stadium ever.

    In that case, the County borrowed 1/3 of the cost, and put 1/3 of the cost on hotel taxes, with the team (supposedly) paying the last 1/3. Even at that (relatively!) reduced cost, it hasn’t been cheap to pay for, especially since there has been very little increased development or tourism in the area of the ballpark. For a poor city like Worcester to pay debt service on a loan that high, the “new downtown” would have to be an enormous success (again, the Iron Pigs host of Allentown shows the downside of this “build it and they will come” approach to development).

    For the record–at this point, Worcester’s main industries are education, medical, and state government–none of which are likely to attract new, high-wage residents or travelers who would use new fancy restaurants, hotels, etc. envisioned in the plan. Poor city with a proud manufacturing history–not sure what a ballpark will do that many other efforts have not to reverse the deindustrialization trend.

    • We’ve actually got a booming biotech industry and a nonstop inundation of “fancy new restaurants” and hotels.

      We added Mustang Bio this year and Wu Xi is building a huge new facility. On top of Abbvie, Charles River, Saint Gobain’s forays into biotech, and a whole slew of smaller companies.

      I’m not very pleased about the park or the team, but the idea that we’re too blue collar for this kind of development is a bit outdated.

      Look into the hospitality scene here though, its nuts how fast its changed.

      • Love the city and the breweries and the Blackstone Canal.

        Holyoke has some great tech firms too, but I don’t think anyone confuses it with Palo Alto yet.

        The issue for the mill towns isn’t that the people are bad, it’s that it has been very hard for the cities to replace the blue collar jobs and civic wealth. A hotel doesn’t change that.

        • Also, I’ve been to some of those redeveloped mill towns — Manchester, NH comes to mind — and while they’re charming and all and I’m sure get more people eating downtown from the surrounding area, I’ve never once been tempted to go and stay in one of them.

          If you’re trying to raise revenues on the backs of people going to see the WooSox, you need those fans to eat and stay in town. Instead I suspect you’re going to get tons of day-trippers from Boston and its suburbs, who will just drive home after the game.

          • Right now Worcester is at a 75% hotel occupancy rate. We’ve been underserved for a while and it was hurting the Conference center and the Colleges.

            From what i understand, the hotels are being built with the explicit intention that they are to add to the hotel base in the city, not pretending they are gonna be used primarily for baseball fans.

            And having spent time in both, Worcester is a world away from Manchester or Holyoke. Not to mention over twice the size of either.

          • So if you need hotels to serve the college and conference crowd, build hotels. But don’t pretend that the tax revenue from those hotels is then somehow attributable to the baseball stadium, which is what Lucchino is doing — and worse, then siphoning off money that could go to the city with or without a stadium to pay for the stadium construction.

            The hotels-plus development may or may not be worthwhile — I don’t have enough information to comment on that. But packaging it with a massively expensive and unproductive stadium doesn’t make the stadium a better deal.

          • Hi, Neil,
            I wanted to draw your attention to this tweet by the Giants beat writer, Hank Schulman:

            https://twitter.com/hankschulman/status/1031964808860426240?s=21

            He seems to be drawing some connection between an A’s stadium and development, as well as singing the praises of the Braves’ stadium as a DESTINATION

          • Again–just want to say that I like Worcester very much.

            I am sure it would be great to see another Hilton Garden Inn go up and succeed. That said, a lot of mid-sized cities with economic profiles like Worcester have trouble keeping overnight demand high–even in Baltimore, the Hilton has been more than subsidized to stay open, and that’s next to Camden Yards!

            Agree with Neil. People are so happy for a good news story that they will believe anything a very self-interested person like Larry Lucchino will say if it leads to something with a sport. hasn’t worked for Springfield, Hartford, Lowell, and a lot of other towns (yet!).

  2. “…there’s a near-infinite number of equally middling-sized cities to move to”: not really.
    Affiliated minor-league teams are governed by strict territorial rules. Each team has a “buffer” of its county AND all of the surrounding counties in which no other team can move in. In this case, Worcester County, Mass., borders Providence County, R.I. — meaning that the PawSox could block any other affiliated team who wanted to move into Worcester, unless they themselves wanted to move there.
    Big-league clubs also have even larger territories, where they can block potential affiliated clubs.
    These rules seriously reduces the number of available markets, and cause struggling franchises to linger much longer in their markets than they’d like to. (Example: the New York-Penn League team in Batavia, N.Y., is a drifting, league-run “ghost ship” that would gladly move elsewhere, but because the Northeast is so crowded with other teams, there’s really very little “open territory” with a sizable population base available to relocate to. The Orioles blocked an attempted move to Maryland a couple of years ago: https://ballparkdigest.com/2016/05/27/muckdogs-move-falls-through-due-to-territorial-issues/)
    These territorial rules are also what has allowed independent baseball to flourish. In the NYC area alone, there are strong independent clubs in places like Rockland, Long Island, Somerset and Montclair, which have far superior markets and stadiums to many NYPL clubs — but affiliated clubs are prevented from moving in there.

    • I hope McCoy Stadium can live on with an indie baseball team or something.

      Seems kind of shortsighted to be the AAA team for the Red Sox and not have synergy between the team in historic Fenway and the AAA team in a old time stadium as well.

      • I’m sure the new Worcester park will have much better facilities for the players, which the Red Sox care about a lot more than any “synergy” created by both Fenway and McCoy being old.

  3. Can I write the story about how this was all a huge waste of money/isn’t close to paying for itself/black hole in the city’s budget/necessitate decreased services at parks and libraries due to the promised development not arising?

    I will give the Boston Globe a discount since I can just do it today and they can hold it on file until 2022 or whenever.

  4. Poor Roger Noll, if only those Soccer teams would stop paying for their own stadiums and providing community benefits agreements.

    • Do you really believe this is what soccer team owners actually want? Or just what they can get?

      Lots of minor (and major) league teams have their CBA-like charitable foundations to play “good neighbor.” Whatever.

  5. I would like to offer my congratulations to the people of Pawtucket. Although your elected leaders offered a truly shameful amount of money to Lucchino, the fact is that they “lost”, which means you win. You won’t be on the hook for paying for any of this ridiculous project, yet the team will only be what, 40 miles away?

  6. One of the arguments people are making in the pro Worcester development camp is that since Worcester is on commuter rail from Boston, all those BoSox fans can just take a T a couple more stops down the line from Fenway and catch a game / bite to eat.

    That being said, as someone who lives in western mass, I am not a fan of our state paying $35 million for this.

  7. Btw, I’ve since read through a bunch of the letter of intent, and on the first bullet point, this is indeed enough future rent payments to pay off $30m in bonds, not $30m in future rent payments. So that’s good. On the other hand, there’s a bunch of other stuff (like a $1 ticket tax on city events at the city-built and city-owned stadium that would go to pay off future team capital costs) that is not so good. I still have yet to sit down and make a full spreadsheet.

  8. Some of us are going to miss the PawSox at McCoy. They were there 49 years! You get used to things if you have them that long. Like someone said above, Good Riddance. I suppose there is a chance that the Worcester deal will fall through and the evil ownership group will come crawling back to rhode Island and beg us to build the Slater Mill/Apex site, I’ll never go to another game. Hell even if they stayed at McCoy now, I’m still done. If someone makes it so clear they don’t really love you and they were just there until they got a better deal. . .
    Just curious–not that it matters now anyway. We’ve heard from evil ownership group and other parties as well–in fact it’s been said so often that it’s just taken for granted–that McCoy was this terrible, archaic disaster and far too far gone to ruin to be saved and far too expensive to fix, more than a new stadium yada, yada. That’s all bullshit, isn’t it? Or is it? I’d honestly like to know what was wrong with McCoy. Can anyone refer me to an honest article or assessment of McCoy? A couple of potholes in the parking lot? Shower heads rusty? Grounds crew’s golf cart got a flat? Seriously! What the hell was wrong with McCoy?

    • There was nothing “wrong” with McCoy per se, it’s just that Worcester was going to build them a nicer, prettier park.

      • Right! That’s my point! Having been a regular visitor to McCoy for a bunch of years, I always thought it was fine. But I’m just there to see a ballgame. I’m not an engineer. I haven’t been all throughout the building. Maybe it’s irredeemable, I don’t know.

        It was just the evil ownership group saying that McCoy was not fixable. Most of the politicians and even the journalists said the same thing. So often and with such an assumption that “of course everybody know McCoy is ready for the wrecking ball. It’s just too far gone etc” became the general received wisdom.